Glucocorticoids exert a variety of actions on tissues and organs in the body. Anti-inflammatory activity, a major action of these hormones, has been shown to be associated with induction of the synthesis of phospholipase inhibitory protein, lipomodulin, in target tissues. Purified lipomodulin mimics most, if not all, of glucocorticoid actions such as anti-inflammation, immunosuppression, arrest of cell growth and promotion of cellular differentiation. All these actions have been attributed to inhibition of phospholipases in plasma membranes, which in turn, alters permeability and intracellular pH. Such changes in intracellular ion compartmentation are suggested to play an important role in the blockade of signal transduction by glucocorticoids.